Spain steadies as property market begins to recover
Friday 3rd February 2017
Written by Roy Weatherby, The Overseas Investor
Much has been written about the effect of the Brexit vote on the UK in general and on the property market in particular. The reality, however, is that the referendum has also had an effect on other countries in Europe and, unsurprisingly, this effect has been felt particularly strongly in Spain, which has long been a popular retirement destination for UK citizens. In reality, however, the issues with the Spanish property market actually date back a few years and are now starting to be resolved.
2008 - when meltdown happened
While it’s almost 10 years ago now, for many people 2008 is a painful memory they’d rather forget. The world of financial services basically erupted into chaos and even though governments around the world scrambled into damage-limitation mode, a lot of collateral damage was inflicted onto the taxpaying population and, unsurprisingly, confidence in the markets was shaken to its core. The Spanish property market took a direct hit with prices being decimated.
2009-2015 - a long recovery
Spain’s many natural advantages (starting with its weather) saw the property market start to claw its way back to a semblance of normality. Its recovery was, however, a bumpy one, hindered by growing uncertainty in Europe in general and the UK in particular. Spain’s entry into the EU saw its property market boosted by international buyers, a significant percentage of whom were from the UK (Germany and Scandinavia were also important). During the early part of this period, the UK was still in a lot of pain from the 2008 financial crisis. As time went by, the UK start to recover but part of the recovery progress involved taking action to reduce the risk that such an event would ever happen again.
One such action was the Mortgage Market Review of 2014, which introduced new “affordability” criteria, aimed at ensuring that borrowers could afford their repayments over the long term. This brought a particular set of challenges for those attempting to borrow on overseas property, since one way or another, this typically involved dealing with two sets of currencies, which were subject to fluctuation. Then there was the UK general election of 2015 in the run-up to which David Cameron promised the Brexit referendum and the Conservative win which meant that the promise would have to be kept. Unsurprisingly this made markets and buyers nervous and saw the value of the pound slide against the Euro, thereby making property in Spain less affordable to UK buyers.
2016 - Brexit
This one little word has had so many repercussions and Brexit itself hasn’t even started yet. In the aftermath of the vote, the pound was decimated, again hitting the affordability of Spanish property. Once the immediate shock had receded, however, basic, fundamental practicalities started to reassert themselves. One of these was that the UK was still very much a part of Europe and therefore it is very much in the best interests of both sides of the equation that there is a positive and cooperative relationship between the UK and the EU, including Spain. The other is that the UK has a strong economy and is likely to remain a powerful economic force even in the face of Brexit.
2017 - the recovery continues
Spain’s popularity as a holiday destination means that it has become a hub of low cost air travel, which has helped to fuel the recovery of the property market since it not only makes it easier (and quicker and cheaper) for ex pats to keep in touch with their family and friends but also means that empty homes can be let out to holidaymakers. Over the latter part of 2016, prices started to recover throughout Spain as a whole and it is expected that this trend will continue, fuelled by the return of British buyers and the arrival of buyers from other parts of Europe and, indeed the world, particularly the Middle East.
For more information or to browse a range of Spanish properties, please visit Hopwood House.
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Editorial Contact Details - Conor Shilling
Editorial Contact Details - Conor Shilling
0845 672 6000
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